Tech News : Bitcoin Value Hits New High

With the famously volatile Bitcoin cryptocurrency briefly hitting a new all-time high value of $69,000 recently, we look at the reasons why this happened and what could happen next.

Why? 

This latest surge in the value of Bitcoin has been attributed to US finance giants like Grayscale, BlackRock, and Fidelity investing billions of dollars into Bitcoin, thereby driving up its value and becoming major players or “Bitcoin whales” in the cryptocurrency market.

Some reasons why Bitcoin is so appealing to them include:

– Bitcoin’s scarcity. This particular cryptocurrency has a cap of 21 million coins, of which 19 million have already been mined, thereby giving potential for high returns.

– Bitcoin ETFs offering a more accessible way for investors to gain exposure to Bitcoin, especially in retirement accounts like IRAs, without dealing with the complexities and costs of direct cryptocurrency purchases and management.

Last High 

Bitcoin reached its new high of $69,000 (on March 5, 2024), only to see its trading value fall to around $62,185 just six hours later that day. Bitcoin’s previous highest value of $68,789.63 was reached back in November 2021. At the time, the rise was fuelled by its increased adoption by mainstream finance and significant investments from large corporations and institutional investors. Also, there was heightened interest in cryptocurrency as a hedge against inflation and currency devaluation amid expansive monetary policies worldwide.

Volatile 

However, from its inception in 2009, Bitcoin’s volatility has become legendary. For example, in 2021 it saw a drop from highs of over $63,000 in April to as low as $29,000 in a few months, while in 2022, Bitcoin’s value plummeted from a high of $68,000 to below $20,000. At that time, the fall was driven partly by the broader instability in the crypto market and the collapse of TerraUSD Classic (USTC). However, many of its famous crashes have been triggered by a variety of factors, including hacks, regulatory changes, market sentiment shifts, and broader economic conditions.

General Upward Trend 

All that said, it’s worth noting that despite the many downturns, Bitcoin has shown a general upward trend and a pattern of recovery and growth over time, though the timing and trajectory of these recoveries have varied widely.

Good News For Some 

Clearly, the current high value of Bitcoin is good news for many investors, not least of which is El Salvador’s President Nayib Bukele’s national government which has followed a policy of purchasing 1 BTC daily following the FTX exchange collapse. What many may see as a somewhat risky endeavour (especially for a nation’s public funds) has seen the country adopting Bitcoin as legal tender, acquiring nearly 2,800 Bitcoins, and now having an investment that could potentially yield a 40 per cent profit! For some, therefore, El Salvador’s policy could be viewed as a forward-looking strategy that could redefine financial sovereignty and economic stability.

What Does This Mean For Your Business? 

The recent surge to a new all-time high of $69,000 for Bitcoin, albeit brief, is significant for several reasons, especially for so-called ‘Bitcoin whales’ and other business investors in the UK and globally. This peak, driven by massive investments from US finance giants, underscores Bitcoin’s appeal due to its scarcity and the potential for high returns. Also, the introduction of Bitcoin exchange-traded funds (ETFs) provides an accessible investment route, avoiding the complexities of direct cryptocurrency management.

This latest high-point reflects Bitcoin’s ongoing appeal amidst a landscape where digital currencies are increasingly viewed as a hedge against traditional financial uncertainties. However, the sharp decline in its value just hours later also highlights the inherent volatility of Bitcoin. Its history is riddled with rapid ascents followed by steep declines, clearly illustrating the risky nature of investing in cryptocurrency.

For businesses considering Bitcoin or other digital currencies as an investment, the current high represents both an opportunity and a cautionary tale. Bitcoin’s appeal lies in its decentralised nature, finite supply, and its potential to offer significant returns. Businesses attracted to Bitcoin enjoy the advantage of high liquidity and the potential to diversify their investment portfolio away from traditional fiat currencies, which may be subject to inflation and devaluation.

That said, its volatility suggests a cautious approach is best, where businesses should not invest more than they can afford to lose and rather consider Bitcoin as part of a diversified investment strategy.

Looking ahead, predicting the future value of Bitcoin and the duration of its current high is challenging with market analysts divided. Businesses should, therefore, try to stay informed and agile, ready to adapt their investment strategies in response to Bitcoin’s rapid price changes.

For businesses wary of Bitcoin’s volatility, there are, of course, alternatives in the cryptocurrency space, such as stablecoins, which are pegged to fiat currencies and offer less price volatility, or investing in blockchain technology itself, which underpins cryptocurrencies and has broader applications across industries.

All things considered, despite this latest rise being good news for some, companies may be well advised to approach cryptocurrency investment with a strategy that acknowledges its volatility, incorporates thorough research, and includes a plan for managing potential downturns.

Tech News : AI Job Risks – Finance & Insurance

Analysis by the Department for Education’s Unit for Future Skills to try and quantify the impact of AI on the UK jobs market found the finance and insurance sector was more exposed than any other.

The Analysis 

“The impact of AI on UK jobs and training” report published online by the government highlights the results of a study that used US methodology to look at the abilities needed to perform different job roles, and the extent to which these can be aided by a selection of 10 common AI applications.

These applications are:

  1. Abstract Strategy Games: The ability to play abstract games involving sometimes complex strategy and reasoning ability, such as chess, go, or checkers, at a high level.
  2. Real-time Video Games: The ability to play a variety of real-time video games of increasing complexity at a high level.
  3. Image Recognition: The determination of what objects are present in a still image.
  4. Visual Question Answering: The recognition of events, relationships, and context from a still image.
  5. Image Generation: The creation of complex images.
  6. Reading Comprehension: The ability to answer simple reasoning questions based on an understanding of text.
  7. Language Modelling: The ability to model, predict, or mimic human language.
  8. Translation: The translation of words or text from one language into another.
  9. Speech Recognition: The recognition of spoken language into text.
  10. Instrumental Track Recognition: The recognition of instrumental musical tracks.

These AI applications were selected based on their relevance and the progress in technology from 2010 onwards, as recorded by the Electronic Frontier Foundation (EFF). They represent fundamental applications of AI that are likely to have implications for the workforce and cover the most likely and most common uses of AI.

The study also focuses on which occupations, sectors and areas within the UK labour market are expected to be most impacted by AI and large language models, and how this could impact workers in different UK geographic areas.

The Findings 

The key findings of the study show that:

– Professional occupations are more exposed to AI, especially those associated with more clerical work and across finance, law, and business management roles.

– The industries least exposed to AI and to LLMs across industries are accommodation and food services, motor trades, agriculture, forestry, and fishing, transport and storage and construction.

– The finance and insurance sector is more exposed to AI than any other sector.

– The occupations most exposed to all AI applications are management consultants and business analysts.

– The occupations most exposed to large language modelling are telephone salespersons, followed by solicitors and psychologists.

– Workers in London and the South East have the highest exposure to AI (five times as exposed as the North-East of England), reflecting the greater concentration of professional occupations in those areas.

These findings led to some press reports that AI’s incursion into our working lives would most affect ‘city highflyers.’

Qualifications and Training

The study also exposes the qualifications and training routes that most commonly lead to these highly impacted jobs, concluding that:

– Employees with more advanced qualifications are typically in jobs more exposed to AI, e.g. those with a level 6 qualification (equivalent to a degree).

– Employees with qualifications in accounting and finance through Further Education or apprenticeships, and economics and mathematics through Higher Education are typically in jobs more exposed to AI.

Other Studies 

Other studies highlighting levels of exposure to AI (AI taking jobs) include:

– A Pew Research Centre Study (2022) which found that 19 per cent of US workers were in jobs highly exposed to AI, where key activities might be replaced or assisted by AI.

– A Goldman Sachs Report (2023) suggesting that AI could replace the equivalent of 300 million full-time jobs globally. It indicates that about a quarter of work tasks in the US and Europe could be replaced by AI, impacting two-thirds of jobs in these regions to some degree.

IMF  

A recent (October 2023) paper also highlights the dual nature of AI in advanced economies – AI’s potential as either a complement or a substitute for labour. The paper also highlights the important point that women and highly educated workers face greater occupational exposure to AI.

It’s worth noting that the Goldman Sachs Report (shown above) also highlighted this dual effect of AI, showing that AI also has the potential to create new jobs and boost productivity, potentially increasing the total annual value of goods and services produced globally by 7 per cent.

What Does This Mean For Your Business? 

As highlighted in the report for this study (and as supported by the findings of other studies), 10-30 per cent of jobs are automatable with fast-evolving AI putting many of those jobs at risk. This government study confirms largely what many people may have expected – that those in more clerical work and across finance, law, and business management roles (where generative AI’s outputs are particularly effective) are most at risk from AI diminishing their value as workers. There are, of course, many other areas (some highlighted by this report) where generative AI is clearly able to replace or reproduce/copy human efforts to an acceptable degree, e.g. from customer service roles to creative work (artists). Some people may find that it’s disconcerting that jobs/professions which have taken years of study and have a specialist element and high social value (e.g. solicitors and psychologists) are shown in the report to be suddenly and significantly at risk from what are, basically, algorithms.

The report’s findings also makes what seems to be quite a logical conclusion that since there’s a greater concentration of professional occupations in London and the South East, it’s more likely to be negatively affected by AI.

The report of the study also makes the valid point about the dual nature of AI’s effects, i.e., that in addition to threatening many jobs, AI also has the potential to increase productivity and create new high value jobs in the UK economy. However, the main focus of this and other studies may appear to confirm the fears of many, that fast-advancing AI is likely to have a profound and widespread effect on the UK economy and society, and not necessarily in a good way for many peoples’ jobs, skills, and value.

As highlighted in the report, the UK education system and employers will now need to adapt to ensure that individuals in the workforce have the skills they need to make the most of the potential benefits advances in AI will bring. As individual workers, many may now want to look at the ways they can maximise their value and be in a position where they can use and orchestrate what are essentially tools more effectively than others, and in a way that adds value to themselves and their own positions, and/or in a way that creates new opportunities.